Texas Warns Drilling Case Would Cost It Billions

HOUSTON—A Texas court ruling classifying drilling for oil and gas as a manufacturing process would cost the state up to $4.4 billion in revenue, its comptroller has warned.

In a hearing in Austin last week, Travis County District Judge John Dietz said he would side with Southwest Royalties Inc. in its dispute with the comptroller over whether metal pipes and other equipment used in creating oil and gas wells should be exempt from state sales tax. The judge hasn't yet issued a written decision.